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Q&A: How Malaysia Airlines can salvage its brand

Published on NewsOK
Modified: July 20, 2014 at 10:42 pm •
Published: July 20, 2014

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Malaysia Airlines is in uncharted territory after the disappearance of Flight 370 in March with 239 people aboard was followed this week by the downing of another of its jets, carrying 298 people, over Ukraine.

A paramedic walks by a part of fuselage at the crash site of Malaysia Airlines Flight 17 near the village of Hrabove, eastern Ukraine, Saturday, July 19, 2014. World leaders demanded Friday that pro-Russia rebels who control the eastern Ukraine crash site of Malaysia Airlines Flight 17 give immediate, unfettered access to independent investigators to determine who shot down the plane. (AP Photo/Vadim Ghirda)

Before the disasters the carrier had among the worst financial performance of any airline. An even bigger question mark now hangs over the future of Malaysia Airlines, with its brand tied to two almost unfathomable tragedies.

Some analysts say the state-owned airline won't survive a year without a substantial cash injection from the Malaysian government.

A bailout would address the airline's immediate financial problems but without far-reaching changes it could remain a burden on taxpayers and shrivel into regional obscurity.

Several experts give their views on the airline's crisis.

— HOW BAD IS THE SITUATION FOR MALAYSIA AIRLINES?

Other airlines have come back from disasters but none have experienced two tragedies of such magnitude within the space of four months.

"There's no historical precedent," said Mohshin Aziz, aviation analyst at Maybank. "It's completely not their fault, but right now if you ask any customers would they fly with Malaysia Airlines, they'd just have that negative sentiment of I'd rather choose something else."

The airline was already losing about $1.6 million a day and has been in the red for the past three years. The disappearance of Flight 370 with many Chinese passengers on board also caused a backlash in the crucial China market. Experts don't see any short cuts to recovery.

"It cannot be a quick fix," said Aziz. "So the second question is do they have the financial resources to survive a year, two years? And the answer is, unfortunately, no."

— IS MALAYSIA AIRLINES TO BLAME?

The airline was blasted for its erratic response to the disappearance of Flight 370 en route to Beijing from Kuala Lumpur. Because the whereabouts of the plane was unknown, Malaysia Airlines had little meaningful information for the families of passengers. Communication of what information it did have was often mishandled, compounding the anguish of relatives.

The plane, believed to have crashed far off course in the southern reaches of the Indian Ocean, still hasn't been found.

The fate this week of Flight 17, heading to Kuala Lumpur from Amsterdam, is far more clear-cut. It was shot out of the sky over an area of eastern Ukraine controlled by pro-Russian separatist rebels.

"They are a victim this time, so it is very different from a situation where they have no answers," said Caroline Sapriel, managing director of CS&A, a company that specializes in reputation management in crisis situations. "The whole world is going to be sympathetic to them."

A few airlines were avoiding flying over Ukraine, which involves taking a longer route, but most weren't since Ukrainian authorities had not closed the airspace above 32,000 feet (about 9,750 meters).